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Definition: IBM

(International Business Machines Corporation, Armonk, NY, www.ibm.com) One of the world's oldest and largest computer companies with revenues of USD $80 billion in 2018. IBM derives most of its income from software and services (see IBM Cloud).

IBM's hardware lines include its Z mainframes, midrange Power models and cloud-based Linux machines (see IBM Z, Power Systems and LinuxONE). It also offers a variety of storage and networking products. Although IBM was a major player in personal computers, Lenovo acquired the IBM PC in 2004 and the x86 server line ten years later.

The company started in New York in 1911 when the Computing-Tabulating-Recording Company (CTR) was created by a merger of The Tabulating Machine Company (Hollerith's punch card company in Washington, DC), International Time Recording Company (time clock maker in NY state), Computing Scale Company (maker of scales and food slicers in Dayton, Ohio), and Bundy Manufacturing (time clock maker in Auburn, NY). CTR started out with 1,200 employees and a capital value of $17.5 million.

In 1914, Thomas J. Watson, Sr., became general manager. During the next 10 years, he dispensed with all non-tabulating business and turned it into an international enterprise renamed IBM in 1924. Watson instilled a strict, professional demeanor in his employees that set IBMers apart from the rest of the crowd.

IBM achieved spectacular success with its punch card tabulating machines. From the 1920s through the 1960s, it developed a huge customer base that was ideal for conversion to computers, spearheaded by Watson's son, Thomas J. Watson, Jr.

IBM launched its computer business in 1953 with the 701 and introduced the 650 a year later. By the end of the 1950s, the 650 was the most widely used computer in the world with 1,800 systems installed. The 1401, announced in 1959, was its second winner; and by the mid-1960s, an estimated 18,000 were in use. See IBM 650 and IBM 1401.

In 1964, IBM announced the System/360, the first family of computers ever developed. The 360s were enormously successful and set a standard underlying IBM mainframes to this day. See System/360.

During the 1970s and 1980s, IBM made a variety of incompatible minicomputers (see System 34, System 36 and System/38). Its highly successful AS/400, introduced in 1988, provided a line of compatible machines for small business, evolving two decades later into the Power Systems family (see AS/400).

In 1981, IBM introduced the PC into a chaotic personal computer field and set the standard almost overnight. Although one of the largest PC vendors, Lenovo acquired IBM's laptop business in 2004 and its Intel-based servers in 2014 (see System x). IBM let Lenovo, HP, Dell, Toshiba and others compete for the end-user market it created (see IBM PC and Lenovo).

In the late 1990s, IBM embraced the Linux operating system on all of its product lines. This was a major shift for a company known for proprietary software. Today, IBM mainframes continue to flourish as a huge amount of enterprise data is still processed by these machines with a lineage dating back five decades.

The Man Who Built an Empire

This photo of Thomas J. Watson, Sr., was taken in 1920, four years before he renamed the company IBM. (Image courtesy of IBM.)

IBM Office, London, 1935

"Dayton Money Making Machines" were sold all across the world. IBM became an international enterprise in the late 1930s. (Image courtesy of IBM.)